Rhinegeist Leaders Detail Michigan Expansion, Innovation ‘Big Bets’ and Growth Plans for 2022
Cincinnati-based Rhinegeist Brewery nearly recovered to pre-COVID-19 levels in 2021, increasing sales +6% year-over-year, VP of Sales Matt Steinke told Brewbound.
Entering 2022, the brewery is confident in achieving at least “high single-digit” growth, he added.
Steinke and brewery co-founder Bryant Goulding shared details on how they plan to grow this year, including plans to add distribution in Michigan, the roll out of a new slate of beyond beer offerings and a focus on core offerings such as Truth IPA.
Brewery to Expand Distribution into Michigan
In the spring, Rhinegeist will expand distribution to Michigan via Anheuser-Busch wholesalers Daniel L. Jacob & Co. (Ann Arbor and Jackson), Petitpren Inc. (Clinton Township, West Side Grand Rapid, Kalamazoo, Romulus and Lansing), Atlas Distributing (Battle Creek) and Fabiano Brothers Inc. (Bay City and Detroit).
Prior to the pandemic, Rhinegeist’s sales were split 65% off-premise, 35% on-premise, Steinke told Brewbound. At the height of the pandemic, with peak on-premise shutdowns and restrictions across the country, off-premise sales’ share increased to 81%, and has since leveled out to around 73%.
In March 2021, Rhinegeist added distribution in Chicago, and expanded statewide throughout Illinois in November.
Overall, sales increased +6.2% for the brewery, with production increasing to more than 102,500 barrels – up from 97,381 barrels in 2020, according to estimates from the Brewers Association (BA). The sales growth outpaced in-house expectations by 1.2%.
If the new Michigan markets meet expectations, Steinke said the brewery can achieve double-digit growth in 2022.
“We’re optimistic,” he said. “We think we have some tailwinds for the first time in a long time.”
New Beyond Beer Offerings Are ‘Big Bet’ for 2022
Last week, Rhinegeist announced the upcoming launch of RGBevs – a line of malt-based, fruit-flavored alcoholic beverages – and Geist Tea, both hitting shelves in early March.
Inspired by the brewery’s fruited ales, the RGBevs line of 5% ABV “hard craft beverages” will launch with four single-flavor 12 oz. 6-packs — Bubbles (apple, peach and cranberry splash), Wowie Colada (pineapple and passionfruit colada), Zango Crush (mango and blood orange smash) and Lemmy Nade (hard lemonade “with a hint of lime”) — line priced at $10.99-$9.99, depending on the market. A limited edition variety pack that will include its new Geist Tea hard black tea will launch this summer.
Rhinegeist’s fruited ale portfolio grew 21% in 2021, accounting for about 16% of the brewery’s business, according to Steinke. The brewery hopes to adapt the success for the beyond beer space, where consumers are looking for similar flavors.
“The consumer is now shopping for flavor, or the perception of flavor, in a completely different section of the store [than beer],” Steinke said. “So these fruited ales we have are over with craft and the consumer that’s looking for these styles is shopping in a completely different space.”
“We’re seeing this migration from the advent of seltzer – which was new and really interesting and was completely in vogue – to an established category that has a need state. But I don’t know how many people are going to be as passionate about seltzer in the next 10 years than they were the last five, so where are those customers going?” Goulding added. “We’d like to skate to where the puck is going, where people are looking for great real fruit, intense flavor and refreshing character out of their beverages. We think that we’re 90% of the way there, and scrub the beer character out and we are there as a hard craft beverage”
The RGBevs line is made with a clear malt base, which Steinke and Goulding said leaves the door open for more beyond beer innovation from the brewery. They noted the change in legal drinking age consumers to diversifying their drinking habits, transitioning from definitions of “beer drinkers and wine drinkers and spirits drinkers,” to drinkers of “all the above.” Rhinegeist hopes to use its existing reputation for product and flavor quality to speak to those consumers who may be veering away from craft.
“This is a bold leap for us. It’s a departure from craft beer for the first time in Rhinegeist history and into craft beverage,” Steinke said. “We know that the craft consumer will shift towards beyond beer, but the beyond beer loyalists is seldomly shifting to craft, so we want these things to be found in the segment that’s talking the most about these flavor-forward products and compete there.”
As such, Rhinegeist is hoping the RGBevs lineup and Tea Geist will be placed on shelves in the cold box next to other beyond beer offerings.
Beyond Beer Moves Open Up Core Beer Opportunities, Despite Supply Chain Challenges
With the transition of its fruited beers to the beyond beer space, Rhinegeist will refocus on its core beer strategy.
“We were getting bogged down by having priority two and three be Bubbles and fruited ale, and we weren’t seating seasonal,” Steinke said. “We were leaving room out there for the beer consumer.”
With Bubbles, Wowie and other fruited beers moving away from the beer section, the brewery plans to focus on its core beers, from its flagship Truth IPA to seasonal offerings.
In 2021, Rhingeist cut its rotating offerings from three SKUs (a Power Pale line, a rotational ale line, and its seasonal brands), to strictly seasonal SKUs. With that, it introduced Sunspun Shandy, a 4.5% ABV golden ale that exceeded expectations.
Additionally, it released its Crumb Cake imperial red ale in package for the first time, after being a draft-only offering for years.
“We couldn’t keep it in stock,” Steinke said. “We just blew right through it. So we think we have some upside in these seasonal brands, and for the first time ever can compete with floorspace and build some impactful displays and grab some more incrementality there.”
The brewery also released a variety pack in 2021. The HopBox variety pack launched in the fall with an exclusive pale ale, and drove half of the brewery’s overall CE growth. The brewery will release another variety pack in 2022, named the Fanny Pack, which will launch in late summer featuring retired brands selected by a fan vote.
Beer innovation in the past year has not been without challenges. Rhinegeist experienced can shortages that challenged its offerings’ flexibility, even requiring them to order cans directly from the country of Jordan in the middle of summer.
“If we’re short on Truth cans, we’re not even going to bring up a conversation about some other seasonal; we just need the Truth cans,” Goulding said. “That is gonna have some serious ramifications in terms of our competitive advantage as craft to be appealing and be innovative in a quick manner.”
“We’ve typically been really nimble, and when the can shortages are real, your nimbleness gets impacted a little bit,” Steinke added.
However, Goulding and Steinke credited the adaptability and commitment of their sales force and production teams with allowing the brewery to still grow despite these challenges. Goulding likened it to a well-run football team.
“I feel like we’re focused on the running game, which is boring and you don’t see the highlight clips, but like we’re moving tough yardage and tough challenging times, and I’m really proud of it,” he said. “The offensive line never gets the credit, but we shouldered through some really rough challenges this year.”
“I’m proud of our team and our resilience,” Steinke added. “It’s really exciting to see your company grow again.”